Recipient's VAT Liability: Payment to a Foreign Account Alone Is Not Enough
A cashless payment to an account held with a payment-service provider outside the Czech Republic cannot, of itself, establish the recipient's liability for the supplier's unpaid VAT under Sec. 109 of the VAT Act. Additional circumstances must accompany the payment, making it evident the payer knew or could have known the aim was non-payment of the tax.
Facts
The tax authority called upon a customer as guarantor to pay VAT unpaid by its supplier, reasoning that the consideration had been paid to an account held abroad — one of the statutory liability triggers. The customer objected that it knew of no risk and that routing payments abroad is ordinary commercial practice.
Legal assessment
The SAC interpreted Sec. 109(2)(b) of the VAT Act in conformity with EU law and CJEU case law on VAT guarantees: strict liability irrespective of fault would violate the principle of proportionality. The 'payment to a foreign account' element therefore cannot be read as an automatic trigger — it is merely an indication that must be accompanied by circumstances proving the recipient's awareness. Those circumstances must be proven by the tax authority; the opposite reading would impose responsibility for another's tax debts without any possibility of exculpation.
Practical impact
Practically: liability under Sec. 109(2)(b) of the VAT Act does not arise from a foreign-account payment alone — the authority must prove you knew or could have known of the intent not to pay the tax. Beware the sister trigger though: paying to an account not published in the payer register creates liability for considerations above CZK 540,000 (twice the CZK 270,000 cash-payment cap, Sec. 109(2)(c)). Routine before every payment: check the published account and unreliable-payer status, archive both. If a guarantor call arrives, demand proof of the awareness element and produce your checks — without awareness the call fails.